Brand new CEO for Yahoo

Yahoo has finally found a new chief executive to replace Carol Bartz and he is Scott Thompson, who till recently was the president of the PayPal division of eBay.

With the deterioration of Yahoo’s core business – user engagement declining, stagnant email product, lack of substantive mobile strategy – turnaround needs to happen at many levels, including product development, infrastructure improvement, talent retention, and brand building, among others, to return the company to a positive growth trajectory. Revenue has declined for the last 12 quarters and with competition continually innovating in these areas, execution of new strategic initiatives and product improvement could be challenging.

Thompson has a track record of proven success with PayPal emerging as a leader in online payments. The company has over 100mm people that have connected PayPal to their credit card and/or bank accounts, a meaningful technology lead, the trust that’s been built around the brand, and over $3.5 bn in mobile transactions already on the platform. It’s worth noting however, that previous CEO Carol Bartz was viewed as a strong restructuring hire who was overwhelmed by this challenge and the conflicting goals of Yahoo’s board and its shareholders.

Scott Thompson has a record of deep industry experience, having most recently served as President of PayPal with overall responsibility for establishing that company as the leading global online payment service. He previously served as PayPal’s Senior Vice President and Chief Technology Officer. Prior to PayPal, Mr. Thompson was Executive Vice President of technology solutions at Inovant, a subsidiary of Visa formed to oversee global technology for the organization. Thompson was also Chief Information Officer of Barclays Global Investors, where he implemented a new strategic technology platform and global infrastructure. In addition, he worked with Coopers and Lybrand, delivering information technology solutions to leading financial services clients.

From those who know him, he is said to have solid leadership skills and tends to focus on technology - both things Yahoo needs badly.

Scott Thompson: new CEO of Yahoo

Yahoo's previous turnaround attempts have flopped under three different leaders with dramatically different backgrounds - former movie mogul Terry Semel, beloved Yahoo co-founder Jerry Yang and profanity-spewing Silicon Valley veteran Carol Bartz.

Now, the struggling Internet company is making yet another unorthodox choice with announcement that it has lured Scott Thompson away from a lower-profile job running eBay's thriving PayPal service to step into the pressure-packed position as Yahoo's fourth CEO in less than five years.

The appointment raised questions among analysts, since Thompson, 54, has no experience in online content and advertising, Yahoo's chief sources of revenue. The timing of Thompson's hiring also came as a surprise, given that Yahoo's board has been considering a sale of all or part of the company since firing Bartz four months ago.

With Thompson's selection, Yahoo's board is signaling that it believes the company can still rebound, despite several years of losing ground to Google and Facebook in product innovation and online advertising.

Yahoo Chairman Roy Bostock dismissed recent speculation that Yahoo might team up with buyout firms to take the company private.

Thompson's job will be to revive Yahoo's revenue growth and repair the company's fractured relationship with investors fed up with a litany of broken turnaround promises.

Yahoo was attracted by Thompson's impressive track record at PayPal, where he was chief technology officer for three years before becoming the online payment service's top executive in 2008. PayPal's annual revenue more than doubled from $1.9 billion when Thompson took over the division to an estimated $4.4 billion last year.

Thompson also will have to lift Yahoo's employee morale, which has deteriorated along with the company's fortunes.

His departure from PayPal threatens to hurt eBay Inc., where the payments service has emerged as the fastest-growing part of a company best known for running online auctions.
Thompson received a compensation package valued at $10.4 million, including a $645,000 salary, from eBay in 2010, according to regulatory documents. Yahoo did not disclose how much it offered to lure him away.

Yahoo awarded Bartz a compensation package valued at $47.2 million during her first year on the job in 2009. The pay, which included a $1 million salary, consisted most of stock incentives that didn't become as valuable as Yahoo projected because the company's stock remained in a funk during Bartz's tenure.